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At December 31, 20X7, Big Corporation reports the following stockholders' equity on its balance sheet. Big...

At December 31, 20X7, Big Corporation reports the following stockholders' equity on its balance sheet. Big uses the cost method for treasury stock accounting. The company held no stock in treasury at this date.

Preferred Stock, 8%, $20 par, cumulative, non-participating

$3,000,000

Common Stock, $5 par

10,000,000

Paid-in Capital in Excess of Par-Preferred

200,000

Paid-in Capital in Excess of Par-Common

27,000,000

Retained Earnings

4,500,000

During 20X8, the following transactions affected stockholders' equity:

Jan.    1     30,000 shares of preferred stock issued at $22 per share. Feb.    1          50,000 shares of common stock issued at $20 per share. Mar. 15 2-for-1 split on common stock

April 15 4,000 shares of common treasury stock purchased at $21 per share. June 10 1,500 shares of treasury stock reissued at $22 per share.

Dec.   30 The preferred dividend of $288,000 is paid, and a common dividend of SOC per share is

declared; to be paid on March 1, 20X9. Assume no dividends in arrears.

Determine the following amounts reported for Big Corporation at 12/31/20X8.

a) Number of Preferred Stock shares outstanding;

b) Number of Common Stock shares outstanding

Solutions

Expert Solution

Preferred stock Common stock
Opening balance $3,000,000/$20 = 150,000 $10,000,000/$5 = 2,000,000
Shares issued on Jan 1                                          30,000
Shares issued on Feb 1                                              50,000
Mar 15, stock split (2,000,000+50,000)                                        2,050,000
Buyback of shares on April 15                                              (4,000)
Resale of treasury stock on June 10                                                1,500
Total number of shares outstanding                                       180,000                                        4,097,500

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ekkarill92 answered 1 year ago
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